Mass. Market: State energy rules at odds with Cape biofuel firm

Sunday

Sep 27, 2009 at 12:01 AMSep 27, 2009 at 4:13 PM

Most of us who gaze out at a sunset over Buzzards Bay see a beautiful view. Curt Felix sees an abundant resource of fuel. But Felix isn't thinking about the water: He's thinking about the tiny plants floating in the water. Saltwater algae - visible to the naked eye only as a turbid cloudiness - could be the state's next great biodiesel source.

Jon Chesto

Most of us who gaze out at a sunset over Buzzards Bay see a beautiful view. Curt Felix sees an abundant resource of fuel.

But Felix isn't thinking about the water: He's thinking about the tiny plants floating in the water. Saltwater algae - visible to the naked eye only as a turbid cloudiness - could be the state's next great biodiesel source.

Felix's startup company, Plankton Power, is exactly the sort of concept that lawmakers had in mind when they passed a law last year requiring that advanced biofuels make up at least 2 percent of all heating oil and diesel vehicle fuels sold in the state as of next July - and 5 percent by mid-2013.

But Plankton Power could be left out in the cold. If changes aren't made to rules being crafted by Gov. Deval Patrick's administration, the Cape Cod firm could find that its fuel doesn't fit the state's definition for the biofuels mandate.

For now, Felix is moving ahead with plans to get Plankton Power out of the lab and into consumers' furnaces. He says he expects to find out this fall if the firm can get a $16 million federal grant that would help pay for a small algae refinery at the Massachusetts Military Reservation in Bourne. He's also lining up $4 million in investors' funds for the pilot project.

The unusual process relies on the oil that algae naturally produce within their cells. Plankton Power's technology tricks algae into producing significantly more oil than normal. The oil is then extracted from the cells. The algae's growth is accelerated and carefully controlled in fabricated, enclosed ponds - greenhouses for green power.

Plankton Power bought the rights to use the technology in the U.S. from a company that developed it in Argentina. Felix says about 30 scientists at the Woods Hole Oceanographic Institution and Marine Biological Laboratory are researching how to refine the process for commercialization in this country's transportation and heating fuel markets.

Felix's family has lived on the Cape for nearly four decades, and he recently finished building a solar house in Wellfleet. So it's convenient for him that the waters off the Cape are ideal for growing algae - and some of the top marine scientists in the country work at the two institutions in Woods Hole.

Felix hopes the pilot project, which could produce nearly 1 million gallons of fuel a year, would attract enough investors to expand to a $300 million, commercial-scale refinery that produces up to 100 million gallons of biofuel a year. The pilot project could employ 30 to 60 people, while a full-scale refinery could fuel up to 125 jobs.

The economic impact on the Upper Cape - a place that isn't exactly swimming with year-round job opportunities - could be meaningful. Then there's the minimal environmental impact of a fuel source that can be obtained right here in Massachusetts.

Unfortunately, this kind of biodiesel wouldn't count toward the state's new biofuels requirement - at least based on the rules that are being crafted by the Patrick administration.

Numerous biofuel executives felt burned last month when Patrick's energy regulators said they plan to give fuel distributors a full year - until July 2011 - to comply with the 2 percent requirement. Even more vexing for firms like Plankton Power: The only kind of biofuel that would count so far would be vegetable waste such as cooking oil.

Robert Keough, a spokesman for Patrick's Executive Office of Energy and Environmental Affairs, says the yearlong grace period would give the fuel industry the proper time needed to document and track the biofuels in the system. He says the focus on vegetable waste can be traced to a requirement that the biofuels cause less than half of the greenhouse gases as those released in comparable petroleum products to be counted toward the 2 percent threshold.

Keough says the U.S. Environmental Protection Agency is working on formulas to calculate the land-use impacts of various biodiesel sources. Keough says the state would widen what it considers to be applicable biofuels once those formulas are available. If the development of those formulas is delayed past the end of the year, Keough says state energy regulators might explore options to qualify fuels that have virtually no land-use impacts, such as algae-based fuels.

Hopefully, state and industry leaders will resolve this quandary in time to send the right message to potential investors who can help innovative firms like Plankton Power get off the ground. The Patrick administration should do what it can to encourage the widespread growth of environmentally friendly fuel sources - especially fuel sources that, when tapped correctly, could seem as limitless as the open sea.

Jon Chesto, business editor of The Patriot Ledger, may be reached at jchesto@ledger.com.

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